Liquor license reform bill clears Assembly committee

A bill that would expand New Jersey’s pool of liquor licenses, widely seen as a potential catalyst for economic development, has taken a key step forward in the state Legislature.

The measure, A3494, was released from the Assembly Oversight, Reform and Federal Relations Committee on Thursday and subsequently referred to the Assembly Appropriations Committee. Among other changes, the proposal would allow municipalities to issue a new type of liquor license to smaller restaurants, which would permit service at tables but not at a bar.

The licenses would be significantly more affordable, but would be subject to annual renewals.

As a tradeoff to existing license holders, the bill calls for providing tax credits to certain businesses that have paid market value for their licenses and are concerned that their investment might be devalued. Liquor licenses can go for six figures or more in many towns, due in part to decades-old limits on the number of licenses that local governments can issue.

Assemblymen John Burzichelli and Raj Mukherji are the primary sponsors.

“Our laws controlling liquor go way back, coming out of Prohibition, and now we sense and I think can make an argument that there’s a significant portion of the economy that is being held back because of these laws,” Burzichelli, a Democrat based in Gloucester County, said Thursday during testimony before the oversight committee.

He also acknowledged that reform was “not an easy thing to do,” pointing to the other side of the issue for existing license holders.

“They’ve played by the rules, they’ve made investments and it’s a considerable portion of their portfolio for their retirement, so we have to be very respectful in how we proceed because we don’t want to improve something here and hurt someone (there).”

Such a bill has been a top priority in recent years for commercial real estate and redevelopment advocates, who say New Jersey’s liquor laws are antiquated. They also say the steep price of licenses has held back the creation of new restaurants owned by smaller entrepreneurs, which can anchor mixed-use projects that bring foot traffic and revitalize downtowns.

Anthony Pizzutillo, who is NAIOP New Jersey’s government affairs consultant, said the action on the bill was a long-awaited and critical step in the right direction. A version of the bill in the prior legislative session was introduced but never made it out of the committee.

“NAIOP is very encouraged with this action today, because it sends a signal to the market that the Legislature is responding to attitudinal changes and market changes in New Jersey for allowing towns to be creative in attracting young people, millennials and the young labor market to live, work and play in the state,” said Pizzutillo, principal of Pizzutillo Public Affairs.

The measure would allow municipalities to issue restricted restaurant licenses to locations between 1,500 and 6,000 square feet, allowing only table service in connection with the sale of food. The initial and annual renewal fee for such a license would be $3,000 for a restaurant of 1,500 to 3,000 square feet and $10,000 for restaurants between 3,001 and 6,000 square feet.

Municipalities may also issue another form of the license that allows for beer and wine service, but not hard liquor, at half the cost to restaurant owners.

Owners of the restricted licenses would be prohibited from selling or transferring them, according to the legislation. The bill also would require municipalities to opt in by passing an ordinance that controls the hours that restricted license holders can operate and other guidelines.

A piece of each initial fee and renewal fee would go to the state to help offset the cost of tax credits that would be issued to existing license holders. The tax credit is required to be taken over a five-year period, in five annual installments, at the rate of one-fifth the total amount of the taxpayer’s allowable credit.

A hearing on the bill on Thursday drew testimony from developers, real estate experts and restaurateurs, along with the New Jersey League of Municipalities, which supports the bill. Most of those supporters, including Burzichelli, acknowledged that there was still a long way to go.

“We have a long process of deliberation and NAIOP, as well as the real estate community, looks forward to working with the sponsor and the rest of the Legislature in getting this legislation into law,” Pizzutillo said.

The proposal will now be considered by the appropriations committee before it can be put to a full vote in the Assembly and before the state Senate considers a companion measure.

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Joshua Burd, an award-winning reporter and editor, has been covering New Jersey commercial real estate for five years. Many industry leaders view him as the go-to real estate reporter in the state, a role he is eager to continue as the editor of Real Estate NJ. He is a lifelong New Jersey resident who has spent a decade covering the great Garden State.

For a project that will bring more than 400 new apartments and townhomes to Gloucester County’s largest town, a joint venture is banking on the demand for health care services as a key driver of the property and a potential model for other mixed-use projects in the state.